Holiday Pay & Voluntary Overtime

June 11, 2019

Holiday Pay & Voluntary Overtime


Article 7 of the Working Time Directive states as follows:


Annual leave


  1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.


  1. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.


Over the last five or so years the issue of what pay is included in holiday pay has been the subject of a significant amount of judicial consideration.


The issue came before the Court of Appeal for further consideration in Flower and others v East of England Ambulance Trust [2019] EWCA Civ 947. I have restricted this post to looking at the position under the Directive and have not addressed any of the issues which arose in respect of interpreting the specific contractual provisions which applied to the employees in this case.


What was it about?


The Claimants’ claim was that the calculation of holiday pay should take account of overtime in two categories: non-guaranteed overtime and voluntary overtime.


The claim was made pursuant to the terms of the Claimants’ contracts and alternatively under Article 7 of the Working Time Directive. Because the Trust was an emanation of the state the non-contractual claim was brought under the Directive rather than under the domestic provisions of the Working Time Regulations 1998.


Non-guaranteed overtime occurred where an employee of the Trust was carrying out a task which must be completed after the end of the shift. Examples were when caring for patients to whom an ambulance has been sent or dealing with a call made to emergency services. In such circumstances, the obligation to complete the task continues beyond the end of the shift. In return, the employee was entitled to payment for this shift overrun.


In respect of voluntary overtime the agreed facts were:


“21. None of the Claimants are or have ever been required or expected to volunteer for overtime shifts and all of the Claimants are and have always been completely free to choose whether or not to work any voluntary overtime shifts.”


Before the Employment Tribunal the Trust conceded that non-guaranteed overtime should be included when calculating holiday pay under the Directive. The Employment Tribunal then went on to find that voluntary overtime should not be included when calculating holiday pay under the Directive.


The Employment Appeal Tribunal reversed the decision and held that voluntary overtime should be included for the purposes of calculating holiday pay under the Directive.


What did the Court of Appeal think?


The Court of Appeal agreed with the Employment Appeal Tribunal. This is a helpful judgment which thoroughly reviewed both domestic and ECJ thinking on Article 7 and in particular the judgment in Hein which had given rise to some doubt about the inclusion of voluntary overtime payments when calculating holiday pay.


At paragraph 32 of Bean LJ’s judgment the position is helpfully summarised:


The CJEU case law establishes clearly that the question in each case is whether the pattern of work is sufficiently regular and settled for payments made in respect of it to amount to normal remuneration. There is no separate requirement that the hours of work are compulsory under the contract.’


What can we take away?


The Court of Appeal confirmed what most lawyers had believed to be the position since Bear Scotland v Fulton UKEATS/0047/14 namely that:


  1. Exceptional and unforeseeable overtime payments should not be included when calculating holiday pay.
  2. Broadly regular and predictable overtime payments should be included when calculating holiday pay.


Peter Doughty

Commercial, Employment, Family, General Civil, Insolvency, Property and Planning, Will Disputes